Contractual auditor controls — the final outcome

Credit providers seek to monitor customers’ performance over the lifespan of a funding transaction. The starting point for this is usually analysis of the audited annual accounts. Funders often place great store by who does the audit and frequently seek to control this by using so-called ‘auditor (or Big Four) clauses’ — these typically require the customer to use either a specified audit firm (usually from a list, often of the Big Four audit firms) or one otherwise approved by the funder.

An extensive reform of the audit process, including auditors’ duties and public oversight, has been in train in the EU since 2006 with the introduction of the Statutory Audit Directive.

As part of this, there has been a focus on ‘auditor clauses’ by both the European Commission and the UK competition authorities. We reported towards the end of last year on a proposal by the Competition Commission (now called the Competition and Markets Authority (CMA)) to issue an order prohibiting the use of ‘auditor clauses’ in loan agreements — in addition to restricting the ban just to loan agreements, the CMA also proposed an exception where ‘objectively justified auditor selection criteria’ could be met. What these criteria would extend to was never entirely clear — the CMA thought that they would include ‘appropriate skills’, but not ‘reputation’…

Click on the link below to read the rest of the Gateley briefing.

Sign in or Register to continue reading this article

Sign in


It's quick, easy and free!

It takes just 5 minutes to register. Answer a few simple questions and once completed you’ll have instant access.

Register now

Why register to The Lawyer


Industry insight

In-depth, expert analysis into the stories behind the headlines from our leading team of journalists.


Market intelligence

Identify the major players and business opportunities within a particular region through our series of free, special reports.


Email newsletters

Receive your pick of The Lawyer's daily and weekly email newsletters, tailored by practice area, region and job function.

More relevant to you

To continue providing the best analysis, insight and news across the legal market we are collecting some information about who you are, what you do and where you work to improve The Lawyer and make it more relevant to you.

Briefings from Gateley Plc

View more briefings from Gateley Plc

Analysis from The Lawyer

View more analysis from The Lawyer


111 Edmund Street
B3 2HJ

Turnover (£m): 71.70
No. of lawyers: 406